Teva to Refrain From Making Layoffs Before Negotiations With Labor Federation

Histadrut and workers’ committees fighting planned Teva layoffs cite the enormous salaries paid to top management.

Teva Pharmaceuticals will refrain from making any layoffs to its Israeli workforce before an agreement is reached with the Histadrut labor federation, said an official who attended Tuesday's meeting between Histadrut chairman Ofer Eini and the company's management.

Eini met with the management of Teva Pharmaceuticals, headed by Dr. Jeremy M. Levin, to discuss its demand for a drastic reduction in the number of layoffs as Teva prepares to downsize its workforce in Israel.

An official who attended the meeting said it was decided that Teva would not begin the layoffs without negotiating first and reaching an agreement about the scope of the cutbacks. Teva’s executive vice president, Ika Abarbanel, and the chairman of the Histadrut Trade Union Division, Avi Nissenkorn, were among those present at the meeting.

“We are aware of the difficulties Teva is going through and are determined to make sure it stays strong,” a senior Histadrut official said. He added that the labor federation’s goal is to convert the layoffs into voluntary retirement with higher severance pay than usual in the job market. But even the Histadrut’s officials realize that layoffs at Teva are inevitable due to its upcoming patent loss on Copaxone in May 2014.

Histadrut officials said Tuesday that for decades, Teva’s relationship with its employees had been good. Sanctions were few and brief, and no significant layoffs took place there thanks to the collective labor agreements the Histadrut had signed with the management of Teva’s nine production facilities. Teva is considered one of the best workplaces in the Israeli industry sector.

Bringing the anti-layoff statute back into law

Before Eini met with Levin, the Histadrut’s leadership held a special meeting with the workers’ committees of Teva’s production facilities in what appeared to be a show of force aimed at Teva’s management. But contrary to expectations, the meeting did not result in the declaration of a work dispute, which would have led to a strike.

Israel’s Encouragement of Capital Investments law once contained a clause restricting employee dismissals by companies that received tax exemptions from the state. During the meeting, Eini called for its reinstatement by the government. “Otherwise, why give them money?” he asked, and added, “If we’re united, we can keep this terrible thing from happening.”

Finance Minister Yair Lapid spoke about the expected layoffs on Tuesday evening. “We must prevent, or at least reduce, the layoffs at Teva,” he said. “There’s value in the fact that the government telephones the CEO of a company like Teva. As I see it, no person in Israel should be laid off. I don’t always see eye to eye with the Histadrut, but right now I’m glad they’re intervening.”

Lapid, who spoke in an interview on Channel 2 News, said, “Seven percent of [Teva's] workers leave every year in any case, and they will try to get them to retire early and leave voluntarily. I’m not pleased with the tax benefits that the large companies received. Previous governments gave them benefits that were too large, and maybe they should have linked that with the issue of employment as well.”

Avraham Zohar, the chairman of the workers’ committee at Teva’s facility in Ramat Hovav that makes the ingredients used to produce Copaxone, said that the committees would fight any layoffs that were done without the Histadrut’s agreement. He said that even after Eini’s meeting with Teva’s top management, he was not convinced that the announcement about the layoffs was true. “I’m not ruling out the possibility that this step was taken to pressure us not to make high salary demands as new pay agreements are about to be signed at the company plants,” he said. “The management wants to create the impression that things are bleak so that we won’t fight for what we deserve. There’s no chance of that,” he said, adding that the workers’ committees would agree to early retirement or voluntary departure in exchange for a good retirement package.

G., 47, who works at the facility in Kfar Sava where Copaxone is made, attended the meeting. “For years I was proud to be a Teva employee,” he said. “While the pay isn’t all that high — it’s less than NIS 7,500 per month — the job security makes up for it. If I’m fired, my chances of finding another job are close to zero. There’s no reason to fire employees while top management gets huge salaries and stock options.”

Opposition chairwoman Shelly Yacimovich (Labor) said that while Levin was right to freeze the layoffs temporarily, his statements had not gone far enough. She said he ought to announce that the layoffs were cancelled completely and cut back on his own salary.

“A company that makes billions, pays zero corporate tax, gets NIS 12 billion from the state and pays huge salaries to its top management has no business treating 800 people so badly. We will be keeping close track of what happens at Teva, and we won’t allow this kind of cannibalism. More than that, and particularly in light of the state comptroller’s report, we urgently need to look into the link between the enormous tax breaks that are given to these companies and their contribution to employment in Israel. Even now it’s obvious that if only some of these breaks were given to small and medium-size businesses, the benefits to the economy would be several times greater.”

Teva's headquarters in Jerusalem.
Bloomberg
Emil Salman